The Spanish cooperative group Dcoop and the Andalusian oil producer Acesur have emerged as winners in the bidding for Deoleo, prevailing over the proposal presented by the Sevillian group Migasa and the Italian Coricelli, in a transaction valued at 520 million euros.
Deoleo and its main shareholders have given their support to the offer from the Spanish consortium for its “attractive and solid financial backing” and for the “high certainty of execution that guarantees this operation,” as well as for the good visibility regarding the timelines planned for the closing.
The group responsible for brands such as Hojiblanca and Carbonell has stated in a note that this strategic agreement strengthens and projects Spain’s international leadership in the agri-food sector.
According to the company, Acesur and Dcoop, with a “deep-rooted connection to Spain’s olive-growing tradition,” provide a “strong connection with the source, broad agricultural reach, and a remarkable production capacity,” factors that fit with Deoleo’s structure in “consumer goods marketing” and in its international sales networks.
A new Spanish oil giant
In a communication sent to the National Securities Market Commission (CNMV), Deoleo has detailed the terms of the transaction, which will result in a Spanish oil giant.
The board of directors of Deoleo has signed a binding share purchase agreement with Acesur and Dcoop to transfer approximately 91.99% of the capital of its subsidiary Deoleo Holding, a percentage that includes all the shares held by the listed company (50.99%) and that could reach 100% if other partners are added.
The company has stated that the operation sets for Deoleo Holding a company value of 520 million euros, calculated on 100% of its share capital.
With this transaction, Deoleo will transfer all of its stake in Deoleo Holding and the buyers will come to control indirectly the operating business developed by the subsidiary and its dependent companies.
The final consideration that Deoleo will receive for its 50.99% will be calculated based on the value of the equity attributable to that stake, once the company value has been adjusted for the existing net financial debt as of the closing date, as well as for any excess or shortfall in working capital and other usual items, in accordance with the mechanisms provided for in the agreement.
As a reference, the company estimates that the value of the shareholders’ equity corresponding to its 50.99% could be in the range of 190 and 200 million euros, before deducting the amounts held in escrow as a guarantee.
The firm has reiterated that this is merely an illustrative estimate, subject to changes at the time of closing, and has clarified that the agreed amount does not grant preferred or additional payment rights to the holders of the warrants issued in the capital increase of May 2020.
In addition, the parties have agreed to immobilize in a custody deposit account part of the consideration in the name of the sellers to cover the tax contingency that affects Carapelli Firenze in Italy.
If the 100% of Deoleo Holding is ultimately sold, this deposit could reach a maximum of 80 million euros for the group of selling shareholders, of which Deoleo would be entitled to an approximate maximum of 40.8 million euros for its 50.99%.
Timelines, permits and conditions
The effective closing of the transaction is conditional on authorization by the competition authorities of Spain and the United States, as well as on the Italian Government’s approval regarding foreign direct investments.
Deoleo expects the processing of these authorizations to last between six and eight months.
During this transitional period, the manufacturer of Hojiblanca and Carbonell has insisted that management, industrial activity and commercial operations will continue to be carried out with complete normality.
The transaction must also have the support of Deoleo’s general shareholders’ meeting. In this regard, Ole Investments, which holds 56.96% of the company’s share capital, has already signed an irrevocable commitment to vote in favor of the transaction.
The contract is also conditional on the Japanese group Mizkan not formally notifying within the next two months the resolution of the license agreements for the Bertolli brand as a consequence of the change of control in the subsidiary.
The process has been advised by William Blair in the mergers and acquisitions (M&A) area and by the law firm Latham & Watkins in the legal sphere.
Deoleo’s chairman, Ignacio Silva, has stated that the transaction “acknowledges the work carried out in recent years and the continued support of the majority shareholders, highlighting a portfolio of iconic brands that form part of our agri-food heritage”.
It has also highlighted that the alliance with Acesur and Dcoop "decisively reinforces Deoleo's leadership across the entire olive oil value chain and provides operational certainty to producers and the sector as a whole".
For his part, the group's chief executive officer, Cristóbal Valdés, has expressed his satisfaction with the agreement endorsed by the board of directors and has recognized the efforts of the workforce.
"Today we are a solid and highly attractive company, recognized for its commitment to quality, innovation and sustainability, and for its international distribution network guided by the Evoo-lution roadmap. This milestone opens a new stage built on solid foundations and with a long-term vision to continue creating value for the sector and all its stakeholders," he said.